Correlation Between Stellantis and Guangzhou Automobile
Can any of the company-specific risk be diversified away by investing in both Stellantis and Guangzhou Automobile at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Stellantis and Guangzhou Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellantis NV and Guangzhou Automobile Group, you can compare the effects of market volatilities on Stellantis and Guangzhou Automobile and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Stellantis with a short position of Guangzhou Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellantis and Guangzhou Automobile.
Diversification Opportunities for Stellantis and Guangzhou Automobile
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stellantis and Guangzhou is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Guangzhou Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Automobile and Stellantis is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Stellantis NV are associated (or correlated) with Guangzhou Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Automobile has no effect on the direction of Stellantis i.e., Stellantis and Guangzhou Automobile go up and down completely randomly.
Pair Corralation between Stellantis and Guangzhou Automobile
Given the investment horizon of 90 days Stellantis NV is expected to under-perform the Guangzhou Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Stellantis NV is 3.22 times less risky than Guangzhou Automobile. The stock trades about -0.08 of its potential returns per unit of risk. The Guangzhou Automobile Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Guangzhou Automobile Group on September 2, 2024 and sell it today you would lose (8.00) from holding Guangzhou Automobile Group or give up 18.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 82.26% |
| Values | Daily Returns |
Stellantis NV vs. Guangzhou Automobile Group
Performance |
| Timeline |
| Stellantis NV |
| Guangzhou Automobile |
Stellantis and Guangzhou Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellantis and Guangzhou Automobile
The main advantage of trading using opposite Stellantis and Guangzhou Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellantis position performs unexpectedly, Guangzhou Automobile can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Guangzhou Automobile will offset losses from the drop in Guangzhou Automobile's long position.The idea behind Stellantis NV and Guangzhou Automobile Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Guangzhou Automobile vs. Volkswagen AG 110 | Guangzhou Automobile vs. Stellantis NV | Guangzhou Automobile vs. Toyota Motor | Guangzhou Automobile vs. Honda Motor Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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